McClain defends UH in face of audit
A critical state audit questions whether the University of Hawaii is ready for more autonomy without showing improvement in its strategic planning, budgeting and financial controls.
"While the university still desires greater autonomy, it has been unable to demonstrate its ability to be accountable to stakeholders for its actions, decisions, and performance," state Auditor Marion Higa wrote in the audit, which was released yesterday.
Higa described the relationship between the Legislature and the university as "strained" over questions of financial accountability.
The audit's findings and recommendations are similar to a report released in 2005 that criticized UH-Manoa's budgeting process.
UH President David McClain harshly criticized the latest audit in a seven-page response, questioning the need for the second audit and saying that it contains "a number of errors and inaccuracies and findings where clarification is required."
McClain said the university is devising an updated strategic plan that will have measurable outcomes. He also cited the university's "Second Decade Project," which attempts to identify state needs and how the university can help meet them.
"The university has been working on the substance of the auditor's recommendations for the past year or more," McClain said, calling it "unfortunate that taxpayer dollars were spent in auditors reviewing documents and processes that were already under revision."
According to the audit, part of the genesis for the audit was that the university did not factor in money from tuition increases into its budget request to the Legislature in 2005.
"The fact that it (the university) had to be prompted to include such a significant source of revenues and that there still remains confusion as to how to project those revenues perpetuates the perception that the university's budget request is a 'wish list' and an attempt to garner as much state funding as possible," Higa wrote.
McClain said that since 2005 the university has been improving its budgeting process, and tuition revenues are part of its current budget request.
The audit also questions the university's ability to adequately monitor contracts for services, citing a seven-year, $13 million contract to implement and maintain the Banner Student Information System. Four years into the contract, the university had spent $18 million, about 44 percent over budget, the report said.
McClain responded that the $13.5 million estimate is just for the cost of implementing the software, which came in at $12.8 million, or $500,000 under budget. He said the $2.4 million ongoing maintenance and support and two upgrades to the software at a cost of $3.8 million were anticipated and budgeted.
But Higa questioned why, if the cost were anticipated, they were not included in the original contract.
Higa called on the university to revise the strategic plans developed for the system and individual campuses under former UH President Evan Dobelle, something McClain said the university is already doing.
Financial audit suggests improvements
Below are key findings and recommendations of the state's financial audit of the University of Hawaii system.
» The current UH strategic plan has limited value and does not promote accountability.
» The university needs to improve its budgeting and internal financial reporting processes.
» Certain polices and procedures over contracts and tuition deadlines are not clear or enforced.
» Review all university strategic plans.
» Ensure that all revenue, including tuition increases, is clearly accounted for in budgetary requests.
» Improve systemwide internal financial reporting.
» Improve procurement and contract maintenance.
» Establish consistent policies and procedures for systemwide functions such as admissions, student registration, billing and student financial aid.